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Illegal Immigration and Second‐best Import Tariffs
Author(s) -
Bandyopadhyay Subhayu
Publication year - 2006
Publication title -
review of international economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.513
H-Index - 58
eISSN - 1467-9396
pISSN - 0965-7576
DOI - 10.1111/j.1467-9396.2006.00563.x
Subject(s) - tariff , enforcement , subsidy , economics , context (archaeology) , monopsony , immigration , wage , international economics , consumption (sociology) , payment , immigration policy , international trade , labour economics , market economy , paleontology , history , social science , archaeology , finance , sociology , political science , law , biology
A version of the small‐union Meade model is presented to analyze the illegal immigration problem in the context of import tariffs. Two possible host nation objectives are considered: (i) to control the level of illegal immigration to a given target; or (ii) to choose an illegal immigration level that maximizes national welfare. Available policy instruments are import tariffs/subsidies, border, and internal enforcement levels. The second‐best tariff on imports from the source nation (for illegal immigration) can be of either sign. It depends on the effect of the tariff on the wage rate and the pattern of substitutability in consumption. In scenario (ii), greater enforcement may be justified if it reduces labor inflow and thereby contracts the protected sector. If enforcement is too costly, tariff policy may substitute for it to exploit monopsony power in the labor market and to counter the distortionary effects of labor flows.